nar growth managment fact book 2011-12-01

7/31/2019 Nar Growth Managment Fact Book 2011-12-01

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Growth Management

Fact Book

Third Edition

PREPARED BY

Copyright 2011, National Association of Realtors

All rights reserved

This document has been prepared by Robinson & Cole LLP in its capacity as consultant to NAR, for informational purposes only.The information contained in this document is not intended nor should it be construed as a legal opinion as to federal or state lawwith respect to any issue addressed. If NAR or its members require legal advice on any issue addressed in this paper, they should

consult local counsel.


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TABLE OF CONTENTS

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PREFACE ................................................................................................................................ 1SECTION 1: INTRODUCTION ................................................................................................. 2PART I: LOCATION, DENSITY AND RATE OF GROWTH

SECTION 2: URBAN GROWTH BOUNDARIES (UGBs)....................................................... 42.01 Purpose and Key Terms ......................................................................................... 42.02 Effectiveness in Achieving Stated Purpose(s) ....................................................... 52.03 Impact on Property Values ..................................................................................... 62.04 Impact on Development Costs ............................................................................... 62.05 Impact on Amount and Patterns of Land Development ......................................... 72.06 Impact on Housing Affordability ........................................................................... 72.07 Summary of Pros and Cons.................................................................................... 82.08 Incentive-Based Alternatives ................................................................................. 9

SECTION 3: GROWTH PHASING, RATE OF GROWTH SYSTEMS ANDMORATORIA ..................................................................................................... 10

3.01 Purpose and Key Terms ....................................................................................... 103.02 Effectiveness in Achieving Stated Purpose(s) ..................................................... 113.03 Impact on Property Values ................................................................................... 133.04 Impact on Development Costs ............................................................................. 143.05 Impact on Amount and Patterns of Land Development ....................................... 143.06 Impact on Housing Affordability ......................................................................... 153.07 Summary of Pros and Cons.................................................................................. 153.08 Incentive-Based Alternatives ............................................................................... 16

PART II: PUBLIC FACILITIES AND INFRASTRUCTURE

SECTION 4: ADEQUATE PUBLIC FACILITIES (APF) AND CONCURRENCY .............. 17

4.01 Purpose and Key Terms ....................................................................................... 174.02 Effectiveness in Achieving Stated Purpose(s) ..................................................... 184.03 Impact on Property Values ................................................................................... 194.04 Impact on Development Costs ............................................................................. 194.05 Impact on Amount and Patterns of Land Development ....................................... 19


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TABLE OF CONTENTS(continued)

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4.06 Impact on Housing Affordability ......................................................................... 204.07 Summary of Pros and Cons.................................................................................. 204.08 Incentive-Based Alternatives ............................................................................... 21

SECTION 5: IMPACT FEES .................................................................................................... 235.01 Purpose and Key Terms ....................................................................................... 235.02 Effectiveness in Achieving Stated Purpose(s) ..................................................... 265.03 Impact on Property Values ................................................................................... 265.04 Impact on Development Costs ............................................................................. 265.05 Impact on Amount and Patterns of Land Development ....................................... 275.06 Impact on Housing Affordability ......................................................................... 285.07 Summary of Pros and Cons.................................................................................. 285.08 Incentive-Based Alternatives ............................................................................... 29

SECTION 6: SPECIAL ASSESSMENT DISTRICTS (SADs) ................................................ 306.01 Purpose and Key Terms ....................................................................................... 306.02 Effectiveness in Achieving Started Purpose(s) .................................................... 316.03 Impact on Property Values ................................................................................... 336.04 Impact on Development Costs ............................................................................. 336.05 Impact on Amount and Patterns of Land Development ....................................... 336.06 Impact on Housing Affordability ......................................................................... 336.07 Summary of Pros and Cons.................................................................................. 336.08 IncentiveBased Alternatives ............................................................................ 34

SECTION 7: TAX INCREMENT FINANCING ...................................................................... 357.01 Purpose and Key Terms ....................................................................................... 357.02 Effectiveness in Achieving Stated Purpose(s) ..................................................... 387.03 Impact on Property Values ................................................................................... 397.04 Impact on Development Costs ............................................................................. 407.05 Impact on Amount and Patterns of Land Development ....................................... 407.06 Impact on Housing Affordability ......................................................................... 407.07 Summary of Pros and Cons.................................................................................. 417.08 Incentive-Based Alternatives ............................................................................... 42


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PART III: PROTECTION OF NATURAL RESOURCES AND

ENVIRONMENTSECTION 8: OPEN SPACE PRESERVATION TECHNIQUES............................................. 43

8.01 Purpose and Key Terms ....................................................................................... 438.02 Effectiveness in Achieving Stated Purpose(s) ..................................................... 448.03 Impact on Property Values ................................................................................... 468.04 Impact on Development Costs ............................................................................. 478.05 Impact on Amount and Patterns of Land Development ....................................... 478.06 Impact on Housing Affordability ......................................................................... 478.07 Summary of Pros and Cons.................................................................................. 488.08 Incentive Based Alternatives ............................................................................... 48

SECTION 9: TRANSFERABLE DEVELOPMENT RIGHTS ................................................. 499.01 Purpose and Key Terms ....................................................................................... 499.02 Effectiveness in Achieving Stated Purpose(s) ..................................................... 519.03 Impact on Property Values ................................................................................... 539.04 Impact on Development Costs ............................................................................. 549.05 Impact on Amount and Patterns of Land Development ....................................... 559.06 Impact on Housing Affordability ......................................................................... 559.07 Summary of Pros and Cons.................................................................................. 559.08 Incentive-Based Alternatives ............................................................................... 56

SECTION 10: FARMLAND AND PROTECTION TECHNIQUES ....................................... 5710.01 Purpose and Key Terms ....................................................................................... 5710.02 Effectiveness in Achieving Stated Purpose(s) ..................................................... 5910.03 Impact on Property Values ................................................................................... 6310.04 Impact on Development Costs ............................................................................. 6510.05 Impact on Amount and Patterns of Land Development ....................................... 6510.06 Impact on Housing Affordability ......................................................................... 6510.07 Summary of Pros and Cons.................................................................................. 6510.08 Incentive-Based Alternatives ............................................................................... 66

SECTION 11: CLUSTER ZONING AND PLANNED UNIT DEVELOPMENT ................... 67


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11.01 Purpose and Key Terms ....................................................................................... 6711.02 Effectiveness in Achieving Stated Purpose(s) ..................................................... 6911.03 Impact on Property Values ................................................................................... 7011.04 Impact on Development Costs ............................................................................. 7111.05 Impact on Amount and Patterns of Land Development ....................................... 7111.06 Impact on Housing Affordability ......................................................................... 7211.07 Summary of Pros and Cons.................................................................................. 7211.08 Incentive-Based Alternatives ............................................................................... 73

SECTION 12: SUSTAINABLE DEVELOPMENT REQUIREMENTS .................................. 7412.01 Purpose and Key Terms ....................................................................................... 7412.02 Effectiveness in Achieving Stated Purpose(s) ..................................................... 8012.03 Impact on Property Values ................................................................................... 8612.04 Impact on Development Costs ............................................................................. 8712.05 Impact on Amount and Patterns of Land Development ....................................... 8812.06 Impact on Housing Affordability ......................................................................... 8812.07 Summary of Pros and Cons.................................................................................. 8812.08 Incentive-Based Alternatives ............................................................................... 8912.09 Sustainable Development Standards at the Neighborhood or District Level ...... 91

PART IV: PRESERVATION OF COMMUNITY CHARACTER

SECTION 13: DEVELOPMENT DESIGN REVIEW .............................................................. 9313.01 Purpose and Key Terms ....................................................................................... 9313.02 Effectiveness in Achieving Stated Purpose(s) .................................................... 9413.03 Impact on Property Values ................................................................................... 9513.04 Impact on Development Costs ............................................................................. 9513.05

Impact on Amount and Patterns of Land Development ....................................... 96

13.06 Impact on Housing Affordability ......................................................................... 9613.07 Summary of Pros and Cons................................................................................. 9613.08 Incentive-Based Alternatives ............................................................................... 97

SECTION 14: NEIGHBORHOOD CONSERVATION DISTRICTS ...................................... 9814.01 Purpose and Key Terms ....................................................................................... 98


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14.02 Effectiveness in Achieving Stated Purpose(s) ................................................... 10114.03 Impact on Property Values ................................................................................. 10314.04 Impact on Development Costs ........................................................................... 10314.05 Impact on Amount and Patterns of Land Development ..................................... 10314.06 Impact on Housing Affordability ....................................................................... 10314.07 Summary of Pros and Cons................................................................................ 10414.08 Incentive-Based Alternatives ............................................................................. 104

SECTION 15: SCENIC DISTRICTS AND CONSERVATION EASEMENTS .................... 10615.01 Purpose and Key Terms ..................................................................................... 10615.02 Effectiveness in Achieving Stated Purpose(s) ................................................... 10715.03 Impact on Property Values ................................................................................. 10815.04 Impact on Development Costs ........................................................................... 10815.05 Impact on Amount and Patterns of Land Development ..................................... 10815.06 Impact on Housing Affordability ....................................................................... 10915.07 Summary of Pros and Cons................................................................................ 10915.08 Incentive-Based Alternatives ............................................................................. 110

SECTION 16: TREE PRESERVATION................................................................................. 11116.01 Purpose and Key Terms ..................................................................................... 11116.02 Effectiveness in Achieving Stated Purpose(s) ................................................... 11316.03 Impact on Property Values ................................................................................. 11416.04 Impact on Development Costs ........................................................................... 11616.05 Impact on Amount and Patterns of Land Development ..................................... 11616.06 Impact on Housing Affordability ....................................................................... 11716.07 Summary of Pros and Cons................................................................................ 11716.08 Incentive-Based Alternatives ............................................................................. 117

SECTION 17: FORM-BASED CODES .................................................................................. 11917.01 Purpose and Key Terms ..................................................................................... 11917.02 Effectiveness in Achieving Stated Purpose(s) ................................................... 12117.03 Impact on Property Values ................................................................................. 12117.04 Impact on Development Costs ........................................................................... 121


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17.05 Impact on Amount and Patterns of Land Development ..................................... 12217.06 Impact on Housing Affordability ....................................................................... 12217.07 Summary of Pros and Cons................................................................................ 12217.08 Incentive-Based Alternatives ............................................................................. 123

SECTION 18: MIXED-USE REGULATIONS....................................................................... 12418.01 Purpose and Key Terms ..................................................................................... 12418.02 Effectiveness in Achieving Stated Purpose(s) ................................................... 13018.03 Impact on Property Values ................................................................................. 13418.04 Impact on Development Costs ........................................................................... 13418.05 Impact on Amount and Patterns of Land Development ..................................... 13518.06 Impact on Housing Affordability ....................................................................... 13518.07 Summary of Pros and Cons................................................................................ 13518.08 Incentive-Based Alternatives ............................................................................. 135

PART V: AFFORDABLE HOUSING

SECTION 19: INCLUSIONARY ZONING/HOUSING ........................................................ 13619.01 Purpose and Key Terms ..................................................................................... 13619.02 Effectiveness in Achieving Stated Purpose(s) ................................................... 13919.03 Impact on Property Values ................................................................................. 14419.04 Impact on Development Costs ........................................................................... 14519.05 Impact on Amount and Patterns of Land Development ..................................... 14519.06 Impact on Housing Affordability ....................................................................... 14519.07 Summary of Pros and Cons................................................................................ 14619.08 Incentive-Based Alternatives ............................................................................. 147

SECTION 20: HOUSING LINKAGE ..................................................................................... 15120.01

Purpose and Key Terms ..................................................................................... 151

20.02 Effectiveness in Achieving Stated Purpose(s) ................................................... 15120.03 Impact on Property Values ................................................................................. 15420.04 Impact on Development Costs ........................................................................... 15420.05 Impact on Amount and Patterns of Land Development ..................................... 15420.06 Impact on Housing Affordability ....................................................................... 154


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20.07 Summary of Pros and Cons................................................................................ 15520.08 Incentive-Based Alternatives ............................................................................. 155


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PREFACE

This updated edition of the Growth Management Fact Bookhas been prepared by Robinson &Cole LLP as consultant to NAR. As an updated resource in NARs Smart Growth program, theFact Book is intended to help REALTORS

at the state and local level better understand and

respond to growth management and sustainability initiatives in their communities.

The Fact Booksupplements, but does not substitute for, the more focused assistance provided byNAR through its Land Use Initiative Program. Its purpose is to provide NARs memberassociations with a basic framework and reference source for engaging their fellow citizens andlocal officials in a productive dialogue about how, when and where growth should take place intheir communities.

Brian W. BlaesserRobinson & Cole LLP

December2011


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National Association of Realtors Growth Management Fact Book (2011 ed.)2

SECTION 1: INTRODUCTION

This 2011 edition of the NARGrowth Management Fact Bookprovides REALTORS with an update offactual information and analyses concerning modern growth management (aka Smart Growth)

initiatives and techniques. The publication of this Fact Book reflects NARs belief that REALTORS

must be able to engage with citizens, legislators and government officials effectively on regulatory issuesof importance to the real estate industry. The Fact Bookis designed to keep REALTORS well informedand help them develop well-reasoned policy positions on growth management-related issues at thenational and local levels.

In the Introduction to the 2008 edition of the Fact Bookwe noted that the Smart Growth movement thatbegan in the 1990s has now converged with two other movements New Urbanism, and GreenBuildingand that this convergence has profoundly influenced government land use and developmentpolicies, and the minds of the consuming public. Today, sustainability has become the overarchingprinciple for the fundamental objectives of these three movementsquality and management of growth,compact urban form and attention to the relationship of buildings and the Public Realm, and sustainablebuilding design, construction and land development. The implementation of these principles through

government regulation and private sector initiatives has dramatically affected the marketplace in whichREALTORS work.

Even though the public discourse today on land use and development issues is more often framed in termsof sustainability, that discourse, at its core, concerns how best to manage and shape the form ofreal estate development to achieve desired outcomes concerning the rate, amount, type, location,characterand quality of growth that occurs. For this reason, this 2011 edition of the Fact Bookcontinuesthe five-part structure which covers the basic objectives that growth management techniques seek toaddress. These are:

Location, density and rate of growth Public facilities and infrastructure Protection of natural resources and environment Preservation of community character Affordable housing

As in the 2008 edition, each of these broad categories is followed by sections describing specificgovernment regulatory techniques utilized to address the issues involved. This new edition has beenexpanded to include a new section onLand Banking.

The discussion of each growth management technique focuses on the following key questions andconcerns that REALTORS should have regarding these techniques:

Purpose and Key Terms Effectiveness in Achieving Stated Purpose(s) Impact on Property Values Impact on Development Costs Impact on Amount and Patterns of Land Development Impact on Housing Affordability


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Summary of Pros and Cons Incentive-Based Alternatives

The discussion under each of these subsections has been updated, as appropriate to provide the mostcurrent factual information and theoretical reasoning, to help REALTORS understand and assess theimplications of using specific growth management techniques in their communities.

Key terms pertaining to each growth management technique are defined or explained in the context of thediscussion. In order to assist the reader in locating and referencing these terms, they are bolded in thetext and also listed in a Glossary of Key Terms in theAppendix to this book. Also in the Appendix, is aSummary Chart that summarizes for each technique the effectiveness of the technique, and its likelyimpact on property values, development costs, the amount and patterns of land development, and onhousing affordability.


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PART I: LOCATION, DENSITY AND RATE OF GROWTH

SECTION 2: URBAN GROWTH BOUNDARIES (UGBs)

2.01 PURPOSE AND KEY TERMS

An Urban Growth Boundary (UGB) is a line drawn on a map to contain urban growth and separate itfrom rural and environmentally sensitive lands. It is the most direct technique for implementing urbancontainment policies as part of growth management or smart growth. From the planners perspective,urban containment has two basic purposes:

1. To promote compact and contiguous development patterns that can beefficiently served by public services; and

2. To preserve open space, agricultural and environmentally sensitive areasthat are not currently suitable for urban development.1

The area within the UGB is referred to as the Urban Growth Area. By definition, it is the area in whichurban growth is encouraged. It should be of sufficient size to allow development sufficient to

accommodate the urban growth that is projected based upon population forecasts. Within the UGB is alsofrequently established an Urban Service Area (USA) which is an area within, but not beyond which,urban services (roads, water, sewer, etc.) will be provided. In theory, the USA should be extended inconjunction with planned public facilities set out in a Capital Improvements Program (CIP). 2 Another

1 Arthur C. Nelson and James V. Duncan et al. Growth Management Principles and Practices (Planners Press:1995)at 73.2Id. at 75. Because the USA is made up of the combination of services to be made available in accordance with theCIP, its boundary is not necessarily uniform, and may vary depending upon the configuration of the particular


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area outside the USA, but within the UGB, is the Urban Reserve. This is an area in which futuredevelopment, including extension of services, is planned. In summary, the Urban Service Area and theUrban Reserve, taken together, make up the Urban Growth Area within the UGB. (See Figure above)

As an urban containment technique, the Urban Growth Boundary is, in effect, a strategy to managespace. Spatial management of land has not been part of the American land use planning tradition,

although it has been a central element of land management programs in other countries such as GreatBritain, where the British Green Belt Program has been in place for almost half a century.3

2.02 EFFECTIVENESS IN ACHIEVING STATED PURPOSE(S)

When assessing the effectiveness of UGBs, it is important to distinguish between local urban growthboundaries and regional urban growth boundaries. When an individual local community draws a UGBwithin its own borders and constrains future development to within that boundary, and establishes rulesand regulations within the UGB, the local UGB can result in higher density within the UGB and lessexpansive new growth within that community than would have occurred if no such UGB were adopted.Hence, viewed solely from the perspective of the local community, the UGB can be an effective tool forslowing and/or stopping growth. However, few communities overtly apply slow growth regulations

within the UGB. It is more common for there to be no express growth restrictions within the UGB.

However, considered at the metropolitan level, the effect of local UGBs will be to divert future growth toother communities in the same market area that may not have established UGBs or adopted growthlimiting measures. This will result in increased growth pressure on those communities. Also, data showthat development within the UGB is more costly and higher costs may tend to redirect buyers to lesscostly locations, if they are available. If a large number of communities within a region adopt localUGBs, the net result may be to divert future growth to more remote, less costly locations, therebyspreading out development into a pattern of sprawl, contrary to the basic purpose of an urban growthboundary.

Where the urban growth boundary is established on a regional basis, this usually requires the

coordination of state, county and local officials. Typically, such a boundary is drawn through the effortsof a Council of Governments (COG) or similar metropolitan body (such as in Portland, Oregon, where thebody is specially elected) or by a body appointed by the state governor (as in the Twin Cities area ofMinnesota) or with the oversight of an agency of the state government (as in New Jersey). The extent towhich these regional UGBs are effective depends upon how stringently growth is restricted outside theUGB. In some places in Florida, for example, developers who are willing to pay for the necessaryinfrastructure can develop new projects outside the regional UGB (if they receive local planningcommission approval). In Oregon, most development outside the regional UGB is prohibited, even ifdevelopers are willing to pay the costs of the entire additional infrastructure required.

There is an ongoing debate regarding the effectiveness of regional UGBs. This debate was focusedprimarily on the experience of Portland, Oregon. While some have argued that the UGB in Portland has

been effective in promoting compact development and preserving open space, agricultural andenvironmentally sensitive areas, others assert that Portlands growth patterns are indistinguishable from

service (e.g., water, sewer etc.) that is planned to be provided. The Figure is merely an illustration of therelationship of the Urban Service Area to the UGB.3Daniel R. Mandelker, Managing Space to Manage Growth. 23 William & Mary Environmental Law and PolicyReview 801 (1999).


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other metropolitan regions and that Portlands UGB has mostly succeeded only in deflecting somesuburban growth into neighboring Washington State.4

It is generally agreed that Urban Growth Boundaries or Urban Growth Areas are not very effective inrural areas with a diffuse population and no real urban center. Because of the counterproductive resultsthat can result from local UGBs, the American Planning Association recommends strongly against

establishing local UGBs.5

2.03 IMPACT ON PROPERTY VALUES

The extent to which a UGB will affect property values depends upon how expansively the UGB is drawn.A very expansive UGB would have little or no effect on property values as it would only restrictdevelopment in places with little or no market demand for new housing. On the other hand, a UGB that isdrawn to include only a small amount of vacant, developable land would be expected to impact propertyvalues. In this case, property values within a UGB will increase because the UGB reduces or eliminatesthe potential for market competition between owners of land inside the UGB and those with propertyoutside the UGB. Property values far outside the UGB would be relatively unaffected as market forces donot support intensive development in such far-flung rural areas. The negative impact of UGBs on

property values is felt in the zone between these two extremes where relatively more intensivedevelopment would have been economically viable were it not for the UGB. 6 Some studies havesuggested that the entire burden of UGBs falls on these in-between areas. In addition, to the extent that aUGB achieves the objective of more dense and better designed development, property values within theUGB will be higher due to perceived higher quality of development.7

It should be noted that land immediately adjacent to the UGB may sometimes experience an increase invalue where a market develops for large, single family ranchettes, martini farms, or hobby farms onlarge lot acreages. These lots experience an increase in value because they provide their owners with theamenity of open space that has been created by means of the UGB. Such rural residential development onthe fringe of a UGB may act as an impediment to future urbanization of these areas. In Oregon, these so-called rural exception lands exist with one- to fiveacre home site developments that compete with the

urban land supply and create long-term impediments to the expansion of the boundary. Theseexception lands are those that are unsuitable for farming or forestry because of their small size ornearness to existing developments. Residents in this urban fringe area oppose boundary expansion toaccommodate new development at higher densities. The result is that the UGB becomes politicized asthese residents outside of the UGB voice their objections to any expansion of the UGB.

2.04 Impact on Development Costs

While UGBs may increase the price of land per acre, this cost increase may be offset by the higherdensity of development within the UGB. The increased price of land within the UGB and zoningregulations allowing greater density should lead to an increase in the density of urban development withinthe UGB. Generally speaking, infrastructure costs are lower per housing unit in higher density

4 Jun Myung-Jin, The Effects of Portland's Urban Growth Boundary on Urban Development Patterns andCommuting, 41 URBAN STUDIES 1333 (2004).5 American Planning Association, Growing SmartsmLegislative Guide Book (2002 Edition), Chapter 6 at 6-54.6 Antonio M. Bento, Sofia F. Franco, and Daniel Kaffine, The Efficiency and Distributional Impacts of AlternativeAnti-Sprawl Policies, 59Journal of Urban Economics 121 (2006).7 James A. Kushner, Growth Management System Evaluation Impact on Land and Housing Costs 1 SUBDIVISIONLAW AND GROWTH MGMT. 4:5 (2011) (hereinafterKushner); See also Brookings Institution, A. Nelson, et al, TheLink Between Growth Management and Housing Affordability: The Academic Evidence 29 (2002).


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developments. Development costs may be further reduced if the UGB development approval process isstreamlined.

2.05 Impact on Amount and Patterns of Land Development

The UGB, if adopted locally by many municipalities within a region, may have the effect of deflecting

future growth to further out locations, thereby increasing sprawl and undermining the purpose of a UGB.Data show that development within the UGB is more costly and higher costs passed on to consumers maytend to redirect buyers to less costly locations, if such are available. By contrast, the regional UGB hasthe potential to minimize this deflection effect and reduce the potential for the leap -frogging ofdevelopment to areas where land is cheaper. A truly regional UGB may be hard to achieve, however, asdemonstrated in Portland, Oregon where the agency responsible for the UGB does not have jurisdiction toregulate Clark County, Washington. Some suggest that Portlands neighborhood densities have increasedsince the 1960s and the adoption of the UGB.8 Others note that because Clark County lies just across theColumbia River from Oregon, Portlands UGB may merely divert suburban expansion to this county,which has been rapidly growing for the last 20 years.9

2.06 IMPACT ON HOUSING AFFORDABILITY

There has been a substantial debate about the impact of UGBs on housing prices. The relatively rapidincrease in housing prices in Portland during the 1990s precipitated this debate. 10 While some haveconcluded that these price increases were the result of the UGBs supply constraining function,11 othershave interpreted the data as providing scant evidence that UGBs increase housing prices, instead findingthat Portlands housing price increases were caused by strong economic conditions, population growth,and other traditional housing market dynamics.12 While not denying the potential for UGBs to limitsupply, advocates of the latter interpretation point to measures undertaken in Portland to promote higherdensity and infill housing as having mitigated the land supply constraints imposed by the UGB.13

Where housing densities increase within UGBs, the higher land prices that also occur within the UGBwill not necessarily result in higher housing prices. In Portland, for example, the state Land Conservation

and Development Commission adopted the so-called Metropolitan Housing Rule setting specificstandards for housing density and housing mix and made the rule applicable to all local jurisdictions in

8 Virginia McConnell & Keith Wiley, Infill Development: Perspectives and Evidence from Economics andPlanning, 4, available athttp://www.rff.org/RFF/Documents/RFF-DP-10-13.pdf (May 2010) (hereinafterMcConnell & Wiley).9 Myung-Jin, supra note 4;see also McConnell & Wiley, at 4.10Seeinformation and figures cited in Jim Robbins, Oregon: Two Sides of the Anti -Sprawl Line, The New YorkTimes (April 22, 2001).11William Fischel, Comment on Anthony Downs Have Housing Prices Risen Faster in Portland ThanElsewhere? 13Housing Policy Debate 43 (2002). See also an empirical study designed to measure the effect ofthe Knoxville, Tennessee UGB and Urban Growth Area (UGA) on housing prices, Seong-Hoon Cho, et al., UrbanGrowth Boundary and Housing Prices: The Case of Knox County, Tennessee, 38 REVIEW OF REGIONAL STUDIES 1,

2008 available athttp://policy.rutgers.edu/cupr/rrs/files/vol38issue1/Cho_RRS_38(1).pdf)(hereinafterCho et al.).The Knoxville UGA was designed to accommodate the Citys growth between 2001 and 2021. The Cho studyconcludes that, all other factors being equal, the value of housing within the UGA, after the implementation of theUGB, is generally higher than outside of the UGA.12See Cho et al. (Interpretations of the empirical evidence are split as to whether the UGB has had any effect onhousing prices in Portland, with some researchers concluding that market demand, not the boundary, has been theprimary driver of housing prices, and others suggesting that the UGB has created an upward pressure on housingprices in Portland.) (citations omitted).13 Kushner, at 4:5; See also Justin Phillips and Eban Goodstein, Growth Management and Housing Prices: TheCase of Portland, Oregon, 18 Contemporary Economic Policy 334 (2000).
http://policy.rutgers.edu/cupr/rrs/files/vol38issue1/Cho_RRS_38(1).pdf)http://policy.rutgers.edu/cupr/rrs/files/vol38issue1/Cho_RRS_38(1).pdf)http://policy.rutgers.edu/cupr/rrs/files/vol38issue1/Cho_RRS_38(1).pdf)http://policy.rutgers.edu/cupr/rrs/files/vol38issue1/Cho_RRS_38(1).pdf)


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the Portland Metropolitan Area. Specifically, the rule mandated that each of the Portland regions 24cities and 3 counties zone land for 6, 8, or 10 units of housing per acre depending on each jurisdictionslocation. It also required that new construction be mixed 50/50 in each jurisdiction between multifamilyor attached single-family units, and single-family detached units. In 1990, the Oregon HomebuildersAssociation and the 1000 Friends of Oregon analyzed data on housing projects approved in the PortlandMetropolitan Area from 1985 through 1989. For each project, actual developed density was compared

with the density that theoretically could have been achieved on the site under the local comprehensiveplan. Their research indicated that overall, housing projects have achieved 79% of the density required bythe Metropolitan Housing Rule, with single family developments averaging 66% of planned densities andmultifamily projects reaching 90% of planned densities.14

Finally, because a regional UGB increases price pressure on land within the boundary and causes homevalues in inner city neighborhoods to rise, this can cause lower income households to be displaced as aresult of higher rents, property taxes, or housing prices. These households may then be forced to movefurther away from jobs, public transit, and other urban amenities that are important to lower incomehouseholds.15

2.07 SUMMARY OF PROS AND CONS

PROS:

A local UGB, from the perspective of the community, allows it to constrain future developmentwithin a boundary and thereby control local growth.

A local UGB, from the perspective of the community, can create higher density that results in amore compact community, at least in the short run.

A regional UGB, if accompanied by stringent controls outside the UGB, can preventdevelopers from creating new subdivisions outside built up areas.

A regional UGB can reduce the total amount of land needed to accommodate a given totalregional population while preserving agricultural lands and environmentally sensitive landsaround the periphery.

A regional UGB can increase the average density of new development and reduce the averagesize of individual lots, resulting in lower infrastructure costs necessary to serve the populationwithin the region.

The increased land prices within the UGB, along with zoning regulations allowing greaterdensity, result in an increase in the density of urban development within the UGB that, in turn,allows for a reduction in overall development costs.

CONS:

A UGB is not effective in rural areas with diffused population and no real urban centers.

14Charles A. Hales, Higher Density + Certainty = Affordable Housing for Portland, Oregon Urban Land(September 1991) at 14.15See Robbins, supra note 10.


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A UGB will confer a market advantage on owners of property within the UGB, as opposed toowners of property outside the UGB.

Properties outside a UGB will decrease in value because of the loss or deferral of their potentialto be developed. Because those properties are not developable in the near future, the UGBimposes unexpected losses on landowners.16

The potential for a UGB to be expanded can be frustrated by the phenomenon experienced insome jurisdictions of large single family ranchettes, or hobby farms, being developed on theperiphery of the UGB. This, in turn, leads to political opposition by the owners of theseproperties who do not want to see the expansion of the UGB allowing higher densities andthereby threaten their open space amenities.

The increased land prices within the UGB can be expected to raise housing prices and thereforenegatively impact housing affordability, except to the extent that the increased density allowedwithin the UGB may limit the degree to which housing prices rise.

A local UGB will deflect future growth away from the community to other nearbycommunities. This will increase growth pressures on those nearby communities that do notadopt local urban growth boundaries.

If a large number of communities adopt individual local UGBs within a region, the net resultmay be to deflect future growth to more remote locations, thereby increasing sprawl anddefeating the purpose of an urban growth boundary.

Because a regional UGB increases price pressure on land within the boundary, home values ininner-city neighborhoods will rise, causing poor households to be displaced from such areasbecause they cannot pay required taxes, and forcing them to move to areas where affordablehousing may or may not be available.17

2.08 INCENTIVE-BASED ALTERNATIVES

The most logical incentive-based alternative to the use of urban growth boundaries to preserveagricultural and environmental sensitive lands is transferable development rights (TDR). If studies andproper planning are done to identify and map areas of a community or region that are considered tocontain prime farmland and/or environmentally sensitive resources, a TDR program can be effective inpreserving such areas by providing landowners with an adequate incentive to retire their developmentrights in exchange for compensation, at close or equal to fair market value. From the property ownersperspective a voluntary TDR program is preferable to a mandatory program, since the latter typicallyinvolves a downzoning of property in order to encourage owners to transfer their development rights toreceiving zones. TDR is addressed in Section 9.

16 National Association of Industrial and Office Properties (NAIOP); National Growth Management Taskforce,Growing to Greatness (1999).17Id. at 35.


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SECTION 3: GROWTH PHASING, RATE OF GROWTH SYSTEMS AND

MORATORIA


The growth management techniques of growth phasing, rate of growth controls and moratoria all haveone concern in common: The timing of when growth occurs. Under conventional zoning, so long as ause is permitted and meets code requirements, it can occur at any rate. The technique ofgrowth phasingcan be used to phase growth or to sequence the order in which areas of a community will develop.Growth phasing is typically tied to a communitys desire to plan for investment in new public facilitiessuch as sewer and water. The planning concept underlying growth phasing is relatively simple:Development is desirable if it occurs as an extension of an existing urban area accompanied byincremental expansion of existing public facilities. Stated differently, growth phasing is little more thantranslation of basic civil engineering principles into development controls designed to minimize the costof public facilities.

The most well-known example of growth phasing is the program that was adopted in 1969 in Ramapo,New York. Under that program, the town adopted a 6-year capital budget for providing municipalfacilities such as street, parks and sewers. It also adopted a capital improvements program, (CIP) whichset out the location and sequence of capital improvements for the 12 years following the completion ofthe first 6-year plan. Over this eighteen year period, the town expected to become fully developed inaccordance with its master plan. The regulations implementing this eighteen year build-out utilized aspecial permit concept under which the issuance of a special permit for a subdivision depended upon thedeveloper demonstrating the immediate availability to the proposed subdivision of five essential publicimprovements and services: (1) public sanitary sewer or approved substitutes; (2) drainage facilities; (3)improved public recreation facilities in schools; (4) roads; and (5) fire houses. No special permit wouldissue unless the proposed residential development accumulated fifteen development points based uponvalues assigned to these specific categories of improvements under the ordinance.1

This development timing provision was applied in combination with the towns traditional zoning

ordinance based upon use districts, over 90% of which in the unincorporated area were zoned forresidential use. The effect of this timing provision in combination with the basic zoning district schemewas to postpone or phase the development of every vacant parcel in the town. This meant thatdevelopment of a parcel could be delayed, in an extreme case, for 18 years. The ordinance establishingthis type of growth phasing was upheld by the New York courts as a valid exercise of local zoning powerunder the delegated powers and permissible purposes provisions of the New York Town Law.2

Rate-of-growth systems, unlike growth phasing, are not always tied to a budget and plan for provision ofpublic facilities. Rather, they tend to be adopted for the purpose of achieving locally desired rates ofgrowth, with the availability of public facilities being a secondary consideration. Rate-of-growth systemscome closer to outright growth control, as opposed to growth management, because they attempt toimpose quantitative limits or quotas on residential and/or nonresidential development.

One of the earliest rate-of-growth programs is that of the City of Petaluma, California. The so-calledPetaluma Plan was adopted in 1971. Under the plan, a green belt boundary was drawn around thecity. All residential growth and the extension of city services were prohibited beyond this line. This

1SeeAmendments to Town of Ramapo Building Zone Amended Ordinance of 1969 described in Landman, No,Mr. Bosselman, the Town of Ramapo Cannot Pass a Law to Bind the Rights of the Whole World: A Reply (Part I),10 Tulsa L.J. 169 (1974).2SeeGolden v. Planning Bd., 334 N.Y.S. 2d 138 (1972).


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aspect, by itself, is similar to an urban growth boundary, discussed in Section 2. However, the City ofPetaluma combined this boundary with a Residential Development Control System in order to regulatethe actual number of building permits issued. In accordance with the Petaluma Plan, the number ofbuilding permits was limited to 500 dwelling units per year for a 5 year period beginning in 1972. Thisfigure was applied only to housing units in developments consisting of 5 units or more. The ResidentialDevelopment Control System used a point system that gave preference to projects that conformed to the

citys general plan and that included low- and moderate-income housing units. The plan also providedthat permits should be issued on an essentially equal basis between single-family dwellings andmultifamily residential units, and also equally between the west and east sections of the city.

This rate-of-growth regulation was challenged by builders and land owners in federal court onconstitutional grounds, namely, that it denied the right to travel to people whose ability to settle inPetaluma would be hindered by the limitations placed on the issuance of building permits, and that thecitys growth control policy violated due process and equal protection because of its alleged exclusionarypurpose or effect. The federal court upheld the regulation as reasonable and did not reach the right totravel issue.3 Rate-of-growth controls have subsequently been adopted in other jurisdictions.

Several entire states, most notably Florida and Washington, follow a Ramapo-type system which they call

concurrency. This is a requirement that certain items of public infrastructure must be availableconcurrent with the impacts of the development. In the absence of infrastructure adequacy, thedevelopment will be postponed until adequacy is achieved, unless the developer voluntarily elects toprovide the needed infrastructure.4

A moratorium is a type ofinterim zoning control that either prohibits all development, or certain typesof development, for a defined period of time. A moratorium is typically adopted by local governmentordinance and, if adopted in good faith, is intended to provide a community with the time to conduct andreview studies necessary for adopting or revising a land use plan and related regulations. Because suchplanning activities are time consuming, the moratorium allows for a planning pause period duringwhich period land development activity is frozen or limited until permanent regulations implementing theplan can be adopted. If the objectives to be sought and the duration of the moratorium are both

reasonable, a moratorium is likely to be upheld.5


Growth Phasing. The Ramapo, New York growth phasing program was not particularly effective inachieving its objectives. One of the problems with the program was that the town did not have controlover two components of its public facilities and services program, namely, fire protection services andsanitary sewer.6 Consequently, when faced with a delay in the completion of the regional sewagecollection system, it was forced to decide to award an automatic 5 points to each development for sewerservice, with the result that each project received one-third of the points that it needed for approval. 7 Theprogram was ultimately repealed. However, growth phasing is currently being used in various forms in

3

SeeConstruction Indus. Assn of Sonoma County v. City of Petaluma, 522F.2d 897(9th

Cir. 1975) revg375F Supp. 574 (N.D. Cal. 1974), cert. denied, 424 U.S. 1934 (1976)4See discussion of concurrency in Section 4.5SeeTahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302 (2002). Note: TheSupreme Court acknowledged that [i]t may well be true that any moratorium that lasts for more than one yearshould be viewed with skepticism. Id.6 Hammer, Siler, George and Associates,Impact on Ramapo Fiscal and Economic Conditions of the Towns GrowthControl Ordinance (Washington: Hammer, Siler, George and Associates 1977). This study was prepared for theNational Association of Homebuilders (NAHB).7Id.


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other jurisdictions around the country. For example, Montgomery County, Maryland utilizes an annualgrowth policy (AGP) as a guide for the planning boards implementation of its adequate public facilitiesordinance (APFO). The AGP includes (1) the current level of service conditions for major publicfacilities; (2) an estimate of the service demands resulting from un-built, but approved, subdivisions; and(3) recommended growth capacity (residential and employment) ceilings for defined policies areas, basedon alternative scenarios of future public facility growth. This growth phasing system is part of a larger

more complex growth management system that includes agricultural land preservation, functional andarea master plans and land development regulations.8

San Jose, California has applied growth phasing controls for specific areas since the early 1970s andcurrently utilizes a residential development permit allocation system based on transportation capacity forthe citys east side.9 In 1977, Westminster, Colorado adopted a growth phasing system designed toaddress capacity constraints in the communitys water and wastewater systems. These systemsestablished the number of water and wastewater service commitments that were to be granted for eachyear for the next two and a half years before new capacity would be available. Service commitmentswere awarded competitively and were valid for up to two years. This system was re-adopted in 1980 andthe criteria for awarding service commitments were revised to give greater emphasis to the design qualityof projects.10

Livermore, California enforces a growth phasing system adopted in 1987 known as the HousingImplementation Program (HIP) based on 3-year cycles of analysis and implementation. The factors takeninto consideration in the preparing each new HIP are water, wastewater, air quality, traffic, parks andopen space, schools and emergency services. Projects having fewer than four units are exempt from thegrowth phasing program. Project-specific evaluation criteria such as street layout, open space,landscaping, architectural design, solar access, facility contributions, innovation and adequate facilities,are used to determine which projects will be approved.11

Monroe County, Florida (the Florida Keys) employs a quota system of allocating building permits. Thissystem applies to all buildings, not just projects with multiple units. This program was implemented aspart of the States Area of Critical State Concern program designed to protect the fragile ecosystem of the

Keys and the surrounding waters.

To the extent that all of these growth phasing programs are effective in achieving their stated objectives, itappears that their success depends in significant part upon the degree of sophistication in their capitalimprovement programming, the use of growth phasing in the context of other growth managementprograms, and the avoidance of arbitrary point-award systems for features or facilities, emphasizinginstead the specific characteristics of particular projects.

Rate of Growth Systems. The effectiveness of the Petaluma Plan, the purpose of which was to restrictgrowth for aesthetic reasons,12 is not clear. The rapid growth that occurred between 1970 and 1972 thatled to the adoption of the growth phasing program did not continue at that rate. In fact, in the majority ofthe years since 1972 the actual growth rate has been below the maximum permitted under the growth

8 Arthur C. Nelson and James B. Duncan, Growth Management Principles & Practices (Planners Press: 1995) at101.; see also Montgomery County Planning, Sustaining Growth For The 21st Century: Montgomery County AdoptsGrowth Policy Guiding Development To Areas Where Public Services Are In Place (available at http://www.mc-mncppc.org/development/agp/agphome.shtm)9 Nelson at 102.10Id. at 103-104.11Id. at 105.12Construction Indus. Assn of Sonoma County v. City of Petaluma, 522F.2d 897, 909 (9th Cir. 1975).


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phasing program.13 The rate of growth program in Boulder, Colorado, which was also established in the1970s, originally applied a three percent annual growth rate. That growth rate was subsequently reducedto two percent. While it appears that the rate of growth program has been effective in limiting the actualgrowth rate in Boulder, its effect has been to cause leap frog development into surroundingcommunities. Demographic data and anecdotal evidence also indicate that the program has pushedfamilies with children into nearby communities such as Longmont, Louisville and Lafayette. 14 San

Diego, California has also imposed annual limits on building permits through its zoning code. This rateof growth regulation appears to have been effective and also withstood legal challenge because it wasconsistent with the citys planning and other regulatory provisions.15

Moratoria. By definition, a moratorium, when adopted, achieves its immediate purpose of halting alldevelopment or limiting development to certain uses for a specific period of time. However, the truemeasure of its success depends upon what is accomplished in the planning process during that interimcontrol period. A moratorium can rationally serve its purpose only if it is preceded and supported by aplanning process that identifies and evaluates the communitys needs and objectives and uses the timeperiod when the moratorium is in effect to develop permanent regulatory mechanisms to address thedesired objectives and policies. The defensibility of a moratorium from the judicial perspective dependson whether the interim controls were adopted in good faith and for a reasonably short period of time and

whether the local government proceeded diligently in completing whatever study or analysis was deemednecessary in adopting permanent regulations.16 It is also important that there be reasonable and beneficialeconomic uses possible during the period of the moratorium.17


Growth Phasing. The impact of a growth phasing program on property values depends, in large part, onhow it is structured. For example, if the program attempts to set priorities for areas that will develop first,it can be expected that those areas will increase in property value by comparison with areas that have notreceived priority designation. In this manner it would function similar to a short term urban growthboundary. If a growth phasing program seeks to phase growth throughout the entire community, whetheror not particular parcels increase in value will depend upon their proximity to available public facilities or

to facilities that are planned within a specific capital improvements program timeframe. To the extentthat a growth phasing program results in developer assumption of certain infrastructure costs, propertyvalues would decline in proportion to the costs assumed.

Rate of Growth Systems. Because rate of growth systems are based less upon analysis of public facilityavailability, but rather reflect locally desired rates of growth, they become growth control measures thattend to limit the available supply of land, thereby creating a shortage of buildable land and driving upland prices. When changes to a rate of growth system depend upon a political decision by the governingbody, the rate of growth percentage or the numerical allocation system tends to become rigid and, similarto an urban growth boundary, can result in a constraint on supply versus demand, thereby leading to an

13See Kelly, E.Managing Community Growth: Policies, Techniques and Impacts (Praeger, Westport 1993) at 208-

209.14 Kelly at 54-59.15SeeBuilding Indus. Assn of San Diego v. Superior Court, County of San Diego, 211 Cal. App. 3d 277, 259 Cal.Rptr. 325 (1989).16See Rohan, 22Zoning and Land Use Controls 22.02 [2] at 22-15n. 17 (Matthew Bender & Company, Inc.:2001).17See Robert Meltz, Dwight H. Merriam and Richard M. Frank. The Takings Issue (Island Press: 1999) Chapter 17at 278. For a discussion of court cases that challenge the reasonableness of building moratoria, see Mark S.Dennison,Zoning: Proof of Unreasonableness of Interim Zoning and Building Moratoria, 32 AMERICANJURISPRUDENCE PROOF OF FACTS 3D 485 (2011).


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overall increase in land prices. Of course, if the limit is higher than what the market demands, a rate ofgrowth system would have no effect on property values.

Moratoria. Because moratoria impose bans on all or specific types of development, they virtuallyalways have the effect of temporarily down zoning property. The extent of value diminution woulddepend on the extent of the moratorium. This diminution of property value raises the issue of a

temporary taking. The U.S. Supreme Court has ruled that when a regulation is found to have takenproperty, just compensation must be paid for the period of time which the regulation denied all use, evenif the deprivation is temporary.18 On the other hand, the U.S. Supreme Court has also ruled that the issueof whether a moratorium effectuates a taking should be analyzed using an ad hoc balancing test that hasgenerally granted broad latitude to local governments in adopting planning moratoria.19

3.04 IMPACT ON DEVELOPMENT COSTS

If a growth phasing program ensures that capital facilities are available at the time a development isapproved, it will likely result in a reduction in the cost of new development compared to comparabledevelopment requiring private financing of the same infrastructure. This is the same likely result underan adequate public facilities program or concurrency. Growth phasing may also make the planning of

new subdivisions and receipt of approvals to build more predictable because of the linking ofinfrastructure with development approval. Because rate of growth programs are not necessarily tied to theavailability of public facilities, the potential benefits of reduced cost for infrastructure and greaterpredictability are not present to the same degree. Because a moratorium effectively halts development, itdoes not have an immediate effect on development cost. However, if a moratorium continues beyond ashort period of time, it can be expected that development costs, assuming normal inflation, would begreater at the point that development is ultimately allowed to go forward. When growth phasing results indeveloper assumption of infrastructure costs, development costs will be increased by the amount of thosecosts.

3.05 IMPACT ON AMOUNT AND PATTERNS OF LAND DEVELOPMENT

To the extent that a growth phasing program prefers development in one part of a community rather thananother based on aesthetic reasons or to protect lands containing wetlands, steep slopes or otherconstraints to development, such a program will alter the potential amount and patterns of development.Because growth phasing is tied closely to the availability of public facilities, the pattern and amounts ofdevelopment will follow the priorities and locations set out in the capital improvements program (CIP).Capital facilities such as highways and sewer lines have been termed the growth shapers.20 Rate-of-growth systems also alter previous building patterns, although the shape of such patterns is not tied asclosely to the availability of public facilities. For example, in Petaluma, the requirement that housingpermits be evenly divided between single-family and multifamily units, presumably was in recognitionthat appropriate sites for these two different kinds of residential units were different. The resultingdevelopment patterns would not necessarily be the same as if the market were allowed to determine thelocation and timing of single family versus multifamily development. Whether a moratorium affects the

amount and pattern of land development depends upon the results of any planning and regulatorydecisions taken during the period of the moratorium. Because a moratorium typically results in decisionsto downzone certain areas, or to change the priority of growth areas, the ultimate effect of the moratoriumwill be to change the amount and patterns of land development. Growth phasing systems that key on

18First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 42 US 304 (1987).19SeeTahoe-Sierra Pres. Council v. Tahoe Reg'l Planning Agency, 535 U.S. 302 (2002).20 Urban Systems Research & Engineering, Inc., The Growth Shapers; The Land Use Impacts of InfrastructureInvestments (Council on Environmental Quality, Washington, 1976).


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adequacy of infrastructure will tend to direct development to areas with adequacy, which may well be inmore distant areas or even in adjoining jurisdictions. The unintended consequence would beencouragement of sprawl. Paradoxically, the expectation or fear of development moratoria in acommunity may actually foster anticipatory development that proceeds more rapidly and at higher orlower densities than would occur without the threat of development moratoria.21


To the extent that growth phasing programs and rate of growth systems drive up land prices ordevelopment costs, they also raise housing costs and negatively impact housing affordability. However,because these kinds of growth timing programs can be coupled with policies giving preference toaffordable housing projects, such programs need not necessarily have a negative effect on the cost ofhousing. Nevertheless, in the case of the Petaluma Plan the effect of the plan has been to significantlyreduce the availability of affordable housing.22 Also, it is generally acknowledged that permit allocationsystems have a potentially exclusionary effect because such systems tend to encourage developers tobuild large, expensive houses in order to generate greater profits.23 If a moratorium exemptsdevelopment proposals for residential housing, then, assuming no change in other factors affecting theaffordability of housing, the moratorium, would not impact housing affordability because it would not

change land supply. If, however, one of the purposes of the moratorium is to halt residentialdevelopment, then the resulting constraint on land supply would increase land prices and correspondinglyincrease housing prices.


PROS:

A growth phasing program enables the timing of development with the availability of capitalfacilities.

A growth phasing program allows a community to tie capital facilities to areas of a communityconsidered most suitable for development.

A rate-of-growth system enables a community to decide upon its locally desired rate-of-growth. A moratorium gives a community time to do proper planning and obtain public participation in

deciding upon policies and regulations to manage future growth.

CONS:

A growth phasing program can result in increased land prices and development costs and canhave an exclusionary effect.

A rate-of-growth system can result in increased land prices and have the effect of excludingless wealthy residents from the community.

21See Geoffrey K. Turnbull, Development Moratoria, 13Journal of Housing Economics 155 (2004).22See Rohan,Zoning and Land Use Controls 4.04 [1] at 4-45. 17 (Matthew Bender & Company, Inc.: 2001).23 Arthur C. Nelson and James B. Duncan, Growth Management Principles & Practices (Planners Press: 1995) at106.


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Rate-of-growth controls adopted by individual communities can induce sprawl by causing leapfrog development and increasing growth pressures on surrounding communities that have notenacted rate-of-growth controls.

A moratorium typically results in the temporary downzoning of property and can, in certaininstances, result in a temporary taking of property.

3.08 INCENTIVE-BASED ALTERNATIVES.

As an alternative to growth phasing programs, a special assessment district (SAD) that allowslandowners within a district to decide how infrastructure needed for development is to be financed andconstructed, has attributes that are less regulatory in nature and allow for cooperative efforts for mutualbenefit. Special assessment districts are discussed in more detail in Section 6. To the extent that acommunity has identified certain land with characteristics such as wetlands or other constraints ondevelopment, it can adopt transferable development rights (TDR) as a market-based incentive programfor owners to retire any development rights they may have in those lands and, in exchange forcompensation, transfer those rights to lands more desirable for development. The TDR concept isdiscussed more fully in Section 9.


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PART II: PUBLIC FACILITIES AND INFRASTRUCTURE

SECTION 4: ADEQUATE PUBLIC FACILITIES (APF) AND CONCURRENCY


Adequate Public Facilities (APF) systems, also known in some places as concurrency managementsystems, tie or condition development approvals to the availability and adequacy of public facilities.Public facilities typically made subject to APF requirements based on adopted level of service (LOS)standards are those relating to roads, sewer systems, schools, water supply and distribution systems, andfire protection.1

The reason a local government adopts an APF ordinance is to ensure that before new development occursits public facilities will have sufficient available capacity to serve the development at a predeterminedacceptable level of service.2 This technique is intended to guarantee that public facilities are either inplace already or that they will be provided as impacts occur from new development. In that way, a county

or municipality can be assured that new development will not place excessive additional loads on existinginfrastructure until necessary capacity has been added to that infrastructure.3 Unlike impact fees and in-kind exaction requirements, APF programs do not require that developers pay for public improvements,but only that such improvements be made before or when development occurs. As a practical matter,though, in those instances where public funds are not available, growth may occur only if the developerpays for needed public facility improvements.4

APF is related to, but different from, growth phasing and rate-of-growth programs. All threetechniques attempt to balance the timing and amount of development with the ability or willingness of acommunity to accommodate it. Growth phasing systems limit the total amount of new development thatcan be approved over the course of a year or other definite period of time, in an attempt to address someof the shortcomings of performance-based APF systems. Rate-of-growth systems have annual

development caps similar to growth phasing systems, but are less closely linked to public facilityconstraints, and instead are typically adopted based on locally desired rates of growth rather than on ananalysis of facility availability.5 Growth phasing and rate-of-growth programs are discussed in Section 3.

APF requirements include two main components: (1) an identification of the types of public facilities andrelated levels of service that are needed to permit new developments; and, (2) a clear policy about when

1 Michael Davidson and Faye Dolnick, eds.,A Glossary of Zoning, Development, and Planning Terms, PlanningAdvisory Service Report Nos. 491/492 at 28 (American Planning Association 1999).2

American Planning Association,Local Land Development Regulation, Chapter 8 in Growing SmartTM

LegislativeGuidebook(2002 Edition) at 8-157.3 National Association of Industrial and Office Properties National Growth Management Task Force, Growing toGreatness: A Growth Management Manual (NAIOP, 2000) at 25.4 Colorado Department of Local Affairs, Colorado Growth Management Toolbox: Appendix to Smart Growth andDevelopment Summit White Paper(Prepared by Clarion Associates, January 1995), available at:http://www.state.co.us/whifront.htm.5 James Duncan and Associates and Eric Damian Kelly,Adequate Public Facilities Study: An Analysis ofAPF/Growth Management Systems, Prepared for the Montgomery County Planning Department and the Maryland-National Park and Planning Commission (November 1991).
http://www.state.co.us/whifront.htmhttp://www.state.co.us/whifront.htmhttp://www.state.co.us/whifront.htm


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the public facilities must be in place relative to the impact of development.6 Implementation of theserequirements requires an ordinance and a map that together spell out the required existing or plannedlevels of service; coordination among planning agencies and service providers; a system designed tomeasure and monitor the levels of public services; and a permit process.7


While most communities that initially used APF or concurrency were located in Florida, Maryland,California and Washington, the practice has spread in recent years to other states, such as North Carolinaand New Mexico.8 Concurrency management has had the longest tenure in Florida. In January 1999, theFlorida Transportation and Land Use Study Committee issued a report in which it identified majorshortcomings in the state's implementation of this technique because of its focus on transportationcapacity. Shortcomings identified were:

The methods used to establish and measure levels of service were focused on automobilemobility, to the exclusion of other modes of travel;

When development could not occur due to roadway deficiencies, property owners who couldnot develop may seek reductions in their tax assessments. As a consequence, the communitysproperty tax base would be compromised;

The system can cause uncertainty for local governments in those cases where developers andtheir financiers become reluctant to undertake projects that would benefit the community butmight not enable the community to meet its stated transportation requirements; and

Transportation concurrency must be based on realistic and financially feasible capitalimprovement programs, but in some cases these programs do not maintain their feasibility overtime.9

The Florida report did not draw firm conclusions about the effectiveness of the concurrency program

because its investigation was largely based on anecdotal evidence. Rather, it made specificrecommendations to the legislature for amendments to the state concurrency program statutes and rules.Legislation in 2005 re-invoked concurrency requirements for transportation and public schools, but withinadequate funding to address the infrastructure backlog.

In 2009, the Florida legislature changed course, passing a bill that significantly changed the concurrencyprogram, removing the requirements for many urban areas of the state (the so-called transportationconcurrency exception areas).10 This legislation was based on findings that the existing concurrency

6Oregon Transportation and Growth Management Program, Adequate Public Facilities Requirements, Chapter inTGM Tools of the Trade (ODOT/DLCD Transportation and Growth Management Program, 1995)(http://www.lcd.state.or.us/issues/tgmweb/pub/tools.html).7

Id.8Mark S. White and Elisa L. Paster, Creating Effective Land Use Regulations through Concurrency, 43 NaturalResources Journal 753 (2003).9Florida Transportation and Land Use Study Committee, Get Concurrency Right, Chapter 2 in Final Report of theFlorida Transportation and Land Use Study Committee (Tallahassee, Florida: January 15, 1999)(http://www.dot.state.fl.us/planning/land_use/final.htm). See alsoIvonne Audirac, William ODell and AnnShermyen, Concurrency Management Systems in Florida, BEBR Monographs, Issue No. 7 (Gainesville, Florida:University of Florida, Bureau of Economic and Business Research, March 1992).10 Thomas G. Pelham, Transportation Concurrency, Mobility Fees, and Urban Sprawl in Florida, 42/43 Urb. Law.105 (2010/2011), discussing 2009 Fla. Laws 96.
http://www.lcd.state.or.us/issues/tgmweb/pub/tools.htmlhttp://www.lcd.state.or.us/issues/tgmweb/pub/tools.htmlhttp://www.lcd.state.or.us/issues/tgmweb/pub/tools.htmlhttp://www.lcd.state.or.us/issues/tgmweb/pub/tools.html


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program had the unintended result of discouraging urban infill and redevelopment and that a change wasneeded to promote transportation alternatives.11 Instead of requiring concurrency in these exceptionareas, the state established new mobility planning requirements, which direct local governments to adoptplans and strategies for funding and supporting alternative modes of transportation.12 In addition to thesechanges, the legislation contains findings that criticize the current system as being too complex andinequitable, and that the current concurrency system is complex, inequitable, lacks uniformity among

jurisdictions, is too focused on roadways to the detriment of desired land use patterns and transportationalternatives, and frequently prevents the attainment of important growth management goals.13A 2006 study published by the National Center for Smart Growth Research and Education at theUniversity of Maryland looked at the implementation of Adequate Public Facilities Ordinances (APFOs)in Maryland.14 The report identified the following significant problems in how these programs had beenimplemented in twelve Maryland counties:

Many counties had made APFOs the predominant planning tool whereas they are intended to beone of many tools used to manage growth.

APFOs were often poorly linked to capital improvement plans, which resulted in longmoratoria on development.

APFOs often had the unintended consequence of directing growth away from areas designatedunder the states Smart Growth policies as appropriate areas for growth and toward areas notintended or appropriate for growth.


Since they control the pace and location of development based on the availability of public facilities, APFregulations could have the effect of increasing property values in those areas where facilities are in placeor designed to be in place in the near future.15 Conversely, all else being equal, with the adoption of anAPF system, one would expect property values to decline in those areas where no facilities are scheduledto be provided in the near future.

4.04 IMPACT ON DEVELOPMENT COSTS

APF would not be likely to impact hard development costs such as material and labor, except to theextent that a developer provides the facilities required under the APF system as a way to accelerate itsability to develop its property. However, because it delays development in areas lacking the necessarypublic facilities, APF would be expected to increase soft development costs, specifically carrying costsin those areas. APF systems tend to be complex and involve additional permitting. Complexity andadditional permitting programs will raise the cost of compliance for developers. Additionally, APF orconcurrency requirements often result in developers assuming heretofore public infrastructure costs,thereby increasing development costs.

4.05 IMPACT ON AMOUNT AND PATTERNS OF LAND DEVELOPMENT

11Id. at 109-110.12Id. at 110.13 2009 Fla. Laws 96, 13(1)(a).14 The National Center for Smart Growth Research and Education at University of Maryland, Adequate PublicFacilities Ordinances in Maryland: Inappropriate Use: Inconsistent Standards and Unintended Consequences, 20(2006).15SeeA. C. Nelson, J. E. Frank and J. C. Nicholas, Positive Influence of Impact-Fees in Urban Planning andDevelopment,Journal of Urban Planning and Development, Vol. 118, No. 2 (1993).


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Because the purpose of APF is to affect the amount and location of land available for development basedon the availability of the necessary infrastructure, it directly impacts the amount and patterns ofdevelopment. Development will be directed toward those areas with adequate infrastructure regardless ofwhere those areas may be. APF can also affect the allowable density of development. APFOs that aretoo strict can substantially reduce the number of housing units developed in the community with theAPFO, often causing that growth to be redirected into areas even less equipped to deal with growth. 16 In

the experience of Florida, some commentators have identified the focus of APFOs on obtaining particularlevels of service for automobile traffic as having encouraged sprawl and worked against other policiestargeted at fostering more compact, walkable communities.17


Depending on how such a system is implemented, housing costs may be affected by development delaysresulting from the APF system. If infrastructure development does not allow housing development tokeep pace with demand, housing prices may be driven higher by shortages in the supply of buildable sites.Furthermore, direct costs of the APF system on developers and builders will be either passed on tohomebuyers, thereby raising housing costs, or absorbed by builders and developers as lower profits,decreasing the builders incentive to build new housing. If APF compliance reduces anticipated profits to

less than an acceptable minimum, builders will not build and the result will be growing scarcity in thenumber of housing units in a community. Such scarcity will tend to increase prices, thus making housingless affordable.18


PROS:

An APF ordinance allows control over the timing of development and clarifies the localgovernment's role in providing public infrastructure.19

An APF ordinance can help direct growth to suitable areas where there is a capacity for growthand thereby contribute to the fiscal stability of the government as well as support therevitalization of urban areas where existing facilities have the ability to absorb growth.20

APF policy can act to prevent leapfrog development patterns and the concomitant costs ofinfrastructure extensions in this type of pattern.21

16Antonio M. Bento, The Effects of Moratoria on Residential Development: Evidence from Harford, Howard, andMontgomery Counties, National Center for Smart Growth: University of Maryland (February 2006).17Ruth L. Steiner, Florida's Transportation Concurrency: Are The Current Tools Adequate To Meet The Need ForCoordinated Land Use And Transportation Planning? 12 University of Florida Journal of Law and Public Policy.269, 288-290 (2001); Thomas G. Pelham, Transportation Concurrency, Mobility Fees, and Urban Sprawl in

Florida, 42/43 Urb. Law. 105 (2010/2011).18See The National Center for Smart Growth Research and Education at University of Maryland, Adequate PublicFacilities Ordinances in Maryland: Inappropriate Use: Inconsistent Standards and Unintended Consequences 20(2006).19 American Planning Association,Local Land Development Regulation, Chapter 8 in Growing SmartTMLegislativeGuidebook(2002 Edition) at 8-157.20 Maryland Office of Planning,Managing Marylands Growth: Models and Guidelines Adequate PublicFacilities (1996).21 American Planning Association,Local Land Development Regulation, Chapter 8 in Growing SmartTMLegislativeGuidebook(2002 Edition) at 8-157. Colorado Department of Local Affairs, Colorado Growth Management


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land assembly and infrastructure improvements such as water and sewer lines, streets, sidewalks andlighting. It is typically used where it is determined by the local government that but for the cost ofinfrastructure improvements needed to support development, the private market would undertake desireddevelopment. The local governments willingness to designate a TIF district and issue bonds to pay forthe cost of these improvements and pay off the bonds with the increased tax revenue from the TIF districtacts as the incentive for developers to undertake the desired development. TIF is discussed in Section 7.


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SECTION 5: IMPACT FEES


A development impact fee is a form of exaction that is assessed by local government upon new

development in order to cover the capital cost of primarily off-site infrastructure (capital facilities)necessary to serve the new development. Simply put, "exactions" or "develop